Friday, November 18, 2011

And Now The Real Bond King Doesn't Like Gold (GLD, TLT, USD)

Last week, I wrote that the real bond king, Yves Lamoureux, was no longer bullish Treasuries, and now he is out with a new blog article saying he is not a fan of gold presently and likes the mighty US dollar as the ultimate hedge.

Is Mr. Lamoureux trying to toy with my intellect? To clarify, his argument--as I understand it--is that the correlation between gold and stocks and commodities is too strong at present for gold to work as a hedge against credit risk. Bonds will not work because the 30-year will have to be "amplified or increased in quantity" and they too will have a positive correlation to financial assets. So what we are left with as the great diversifier is the US dollar and not gold or bonds.

For me, there is a step missing in his argument, and that is what makes the US dollar rise in value. Will the US dollar rise because, as we saw in 2008, there was forced buying of US dollars as leverage unwound and money had to return home, so to speak? Does he see a similar meltdown happening again and perhaps starting right about now? Why else would the US dollar rise in value?

Concerning a fall in gold, Alf Fields also said recently that there could be one more correction in gold before it launches, "the possibility (40% probability?) that gold will have another dip to test the target areas [a 21% - 26% decline from the top] mentioned. The higher the price goes above $1767, the greater the probability that the low was in at $1531."

Possibly Mr. Lamoureux sees what Mr. Fields sees using a different methodology.

I had to look back at some charts for 2008 to see what I know was going on with the US dollar and bonds. It goes well with what Mssrs. Lamoureux and Fields say. Below you can see the performance of the US dollar and SPDR Gold Trust (NYSE: GLD) during the crisis of 2008.

I remember July and October very well, believe me, and I wonder if that is something akin to what Mr. Lamoureux expects to see in the near future.

Still, bonds, or iShares Barclays 20+ Yr Treas.Bond (NYSE: TLT), performed extremely well in late 2008 but dropped off a cliff before markets bottomed in early 2009. I am wondering if we could see a delayed spike in TLT once again, and I'm talking another monster of a spike. I suppose Mr. Lamoureux would say, "No, you won't see it this time." We will see.

I'm mostly in cash at the moment and not because of Mr. Lamoureux or my belief in paper currencies . . . except for my ridiculous Agnico-Eagle Mines (NYSE: AEM) buy and a dabble here and there . . . simply in cash because I'm not sure when the runaway train in equities and gold will depart. That train is going to leave the solar system!

And yes, AEM sucks.

Good luck to all and read Mr. Lamoureux's article here.

Tuesday, November 15, 2011

How Many Solar Companies Does It Take To Screw In A Light Bulb?

Shares of solar companies have taken a young Mike Tyson-style beating and the responsible destructive forces could knock down many of these companies into penny-stock status or bankruptcy.

JinkoSolar (NYSE: JKS), the vertically-integrated Chinese solar manufacturer got pounded yesterday after it lowered its Q3 guidance for total solar module shipments to a range of 210 MW-220 MW from its previous guidance of 230 MW - 250 MW. It also cut its Q3 total revenue forecast to $270 - $280 million from $310 - $330 million. For full-year 2011, JKS cut its shipment expectations to 770 MW – 800 MW from 950 MW – 1000 MW and total revenues to $1.1 – $1.2 billion from $1.4 – US$1.5 billion. Bam! Down 13%!

"Weak market demand and declining average selling prices throughout the solar supply chain resulted in shipment volumes and revenues that were lower than we expected in the third quarter," said Kangping Chen, CEO of JKS.

Duh. Tell us something we didn't know already, Mr. Chen.

So we have weak market demand and declining prices, cuts in subsidies in the largest solar markets, dudes running many of these companies who you wouldn't trust handling a butter knife (or just plain crooks and liars), and now as an investor you have to ask yourself if solar is down for the count or if we are seeing solar bottoming here.

I'll not say solar has bottomed, and as Hugh Hendry said, "Only monkeys pick bottoms," but I will say that solar companies in particular are looking attractive to me because of all of the above reasons save the crooks and liars bit.

Solar is experiencing a structural change and finding the ability to stand on its own two feet. With the price drops, solar is now beginning to be able to compete with fossil fuels, and when pricing on installations also falls, Mom and Pop could put solar on their rooftop without government help or having to offer an unborn child to close the deal.

Installation costs are sinking dramatically in the US. According to a report by the Department of Energy's Lawrence Berkeley National Laboratory released September 15, the average installed cost of residential and commercial PV systems completed in 2010 fell by roughly 17% from 2009 and by an additional 11% within the first six months of 2011. Average non-module costs for residential and commercial systems declined by roughly 18% from 2009 to 2010.

When it makes sense to get solar instead of relying on a power company for all your electricity needs, that's when I'll be going all in. For now, it is too damn expensive. My father would like to put solar panels on his house in California, but the initial cost leaves him shaking his head.

Make no mistake, solar is coming to rooftops all around you, and the declines we have seen in pricing is very positive for the sector, though at the moment it is not positive for module producers. It will be. Even more so if the true costs of fossil fuels are seen in their prices.

A few of the solar companies I'm following but not buying are First Solar (NASDAQ: FSLR), down approximately 66% YTD; LDK Solar (NYSE: LDK), down approximately 65% YTD (I hold some March 2012 $4 calls); JKS, down approximately 66% YTD; ReneSola (NYSE: SOL), down a whopping 77% YTD.

Those that bought and held are definitely down for the count, but I believe there will be some major winners in the sector that will be printing money for me in the coming years.

Friday, November 11, 2011

Uh-Oh, The Real Bond King Is No Longer A Bond Bull

The real bond king, Yves Lamoureux, of Macquarie Private Wealth--not that Gross dude in So-Cal--has written that he is no longer bullish Treasuries and has sold all his 30-year STRIPS. This is coming from the man who has been a bond mega-bull since 2009, when he predicted yields would go to 2.75%.

Two years later, Treasuries hit his target, almost a perfect bullseye, and Mr. Lamoureux now says he believes the bond market is starting a topping process--a process he says could take several weeks to several months. What was so remarkable about his bullish call in 2009 is that so many know-it-alls at that time and in 2010, such as Nassim "Black Fowl" Taleb, were saying that shorting Treasuries was a "no brainer." The know-it-alls ended up showing they were the no-brainers. Mr. Lamoureux proved he has one.

I haven't seen Mr. Lamoureux on television, heard him on the radio, or seen him in print or on his blog in well over a year. Perhaps he was waiting for his Treasuries to reach his target before resurfacing, so he could rightly claim his crown as the real bond king.

He says he will write on "equity duration, risk parity and the true sole remaining diversifier in my upcoming posts." You can read his current post here.

If you would have listened to Mr. Lamoureux and simply bought iShares Barclays 20+ Yr Treas.Bond (NYSE: TLT) in early August of 2009, you'd be up approximately 22% not counting your div. Over the same period, the S&P 500 is up approximately 15%. Not bad, Mr. Lamoureux, and I wish I would have listened to you more closely and just sat on a pile of TLT.

Let us see what he says about equities. As I wrote yesterday, I started buying because I have a vision of a bull riding weakness, and it rides weakness to the sky.

If you have the time and enjoy literature, please read Chapter One of More All The Patriot Terrorist by S S_____.

Thursday, November 10, 2011

The World Don't End Because Of Greece Or Any Of The PIIGies

Yeah, I know, smarty, that ain't proper conjugation for you but where I come from it is. He, she, and it don't and they doesn't.

The world don't end when Greece switches to using olives for its hard currency and neither will it stop spinning when all the PIIGies in the eurozone are bacon. Tough times for some (I'll probably be included in that "some")? Sure. But the sun will still come up in the morning and you'll still have your gadgets feeding you news and tweets . . . there will be plenty of the ridiculous to keep you going . . . and maybe, just maybe, your life won't be so boring--why the hell else would you be reading this?

As for the markets, bang bang Boom! and then it is dead. All the fuses have been lit and the equity market is about to explode to heights unseen. The markets will rise because of weakness, not because of strength--that is why the boom is followed by death. That is my vision at the moment. Perhaps it will change in the weeks and months ahead but I am starting to buy here. I will not name names because sometimes my visions lack, er, vision, and I would hate to lead anyone into what should be my personal hell.

An example of me being myopic was my Agnico-Eagle Mines (NYSE: AEM) buy. At least now I can stomach my losses from AEM. A few weeks ago my losses would have fed a family of four for a couple of years but now my losses would only keep a family of four with full bellies for six months. I hate miners and I want to repeat that: I hate miners! AEM sucks sucks sucks, and yet I'm holding onto it.

I should end by writing something poetic but thinking about AEM makes me so. . . .

If you have the time and enjoy literature, please read Chapter One of More All The Patriot Terrorist by S S_____.

Saturday, November 5, 2011

Martin Armstrong Wrote Another Beautiful Piece

Martin Armstrong of Armstrong Economics possesses an unparalleled ability to connect dots and weave history into his essays on finance and government, and his latest, "Is the Zurich Alleged Super-Entity Real?" is a must read for anyone curious about where the US is and could be heading as a nation.

Mr. Armstrong's basic message in this essay, or my understanding of it, is people should be wary of constructing grand, impossible conspiracies when the reality of corruption and malfeasance is out in the open for all to see.

Neither finance nor government--two ideas inextricably joined to one another--could exist without the other. (As to which came first, we are left with the chicken and egg dilemma.) New York-based banks and corporations (include the so-called free press) have taken de facto control of our government, i.e., they have become two sides of one coin, wresting most power from a citizenry that is pushed and pulled in any direction the government pleases. What is at stake is our idea of liberty. The banks and corporations, through government, seek to expand their control, and their grip on us is growing ever tighter. This is a theme that runs through Mr. Armstrong's writings, and perhaps I have read too much in his words because of my personal philosophical leanings, but I believe I would not be far off the mark by saying he views the Corporatocracy as an entity that is conducting a war against the individual, a war that became a blitzkrieg after 9-11.

Mr. Armstrong, as do I, fears that a class war would speed up the process of eroding what we have considered basic individual rights for most of our history as a nation. A class war will become more likely as the economy in the West continues its decline in the years ahead. This is why the Occupy Wall Street protesters should be careful not to spend too much energy decrying economic inequality, an "us versus them" anthem, and instead apply more energy to saving and resurrecting liberty and justice. We will never have a perfectly level playing field concerning liberty and justice, but we can aspire to one. With greater individual liberty and individual responsibility, along with a legal system that is just, we could rebuild our vivisected middle class. This would mean wresting the power from corporations but not at the expense of individual liberty, for then our country will devolve into a society of mob rules (see fascism or communism).

I wish it were called Liberty instead of Occupy Wall Street.

The government should fear the people but it has become the other way around. The bogeyman's name starts with a capital G. We must change it back to a lowercase g.

Please read Chapter One of More All The Patriot Terrorist by S S_____.

Friday, November 4, 2011

What Would George Carlin Think Of OWS?

Concerning the Occupy Wall Streeters and what George Carlin would think about them if he were still around and not hanging out with Joe Pesci, my bet is he'd be disappointed, and not only that, but bored.

It's so f'ing boring.

Streeters don't even equal the fans that show up to stadiums on Sundays to see American football. For a movement to work it needs bodies . . . or if it doesn't have the live bodies, then maybe hanging a few banksters (1869 ring a bell?) could give it some traction, and support.

But . . . yawn.

Is there a sense of urgency by government officials to address issues raised by Streeters, to seek a dialogue because they see Streeters as having the potential to alter the power structure in the US? Nope. Government officials ignore Streeters because the movement is looked upon as a fad, a temporary diversion for those that lead otherwise boring and meaningless lives.

If I were Senator Bic, I'd think, This is only a freak show. It's a small percentage of American youth and whackos with nothing going for them. Just listen to the Jim Jones-like style of communication, with Streeters chanting the words of speakers. Buy a fooking mic, would you? Those people aren't voters and are not representative of the average American. When are the Niners playing Sunday?

No hanging banksters, no cities aflame, way too little drug use and public copulation, and not even a good battle with the cops. Americans are lazy and Streeters are a reflection of that. Mr. Carlin would probably be watching videos of Greece because at least over there not only do people turn out, but there is some real action too, quite a bit of tussling with the police. Even the vandalism in Oakland was lame. Mr. Carlin probably would have wanted an American uprising without so many of the participants documenting every "feeling" that they have through their iPhones.

Fook your so-called feelings, Streeters, and give us some action!

Years ago, Mr. Carlin said everything these twits are saying now, and like he said, "Nobody seems to notice, nobody seems to care."

Wednesday, November 2, 2011

Why Did I Buy AEM?

I knew I should have waited. I told myself not to buy Agnico-Eagle Mines (NYSE: AEM), to wait a few days and then consider taking a position. Didn't listen to reason and threw paper at a crap company that might close over $44 today. All's okay, only down a few thousand . . . if I would have listened to myself and waited for the selling to subside, then I'd be near breakeven.

I acted like a foolish novice, lacking circumspection and patience. I hate miners. What a scam they are, and yeah, maybe it was a nostalgia play because in 2009 I minted money because I blew a big wad on AEM and Barrick Gold (NYSE: ABX) in late October of 2008 . . . yeah, whatever, miners are a scam. Hate 'em yet I can't resist buying them now and again.

Only thing that saved me was I loaded up on LDK Solar (NYSE: LDK) $4 March 2012 options when the company was trading below $3. I sold almost all of them last week for a tidy profit that balanced my retarded AEM play. Hate solar companies too and they're also a scam, though you can make some good money in them if you know what you're doing and one of your friends is the enigmatic The Renewable Man.

Please stay away from the market if you don't have money to lose. Or what the hell, it's only paper.

Germany Not Printing Deutsche Marks, Yet

Frankfurt--New Deutsche Marks have not been printed but presses have been set up to print Germany's former official currency, according to a source in the German government.

"Though there are stories out there that Germany has already started printing, they are false and are only based on speculation by people who think too highly of themselves," said the source.

The euro experiment is not going to end today or tomorrow. I believe it will end but its end is not imminent. The euro will be around much longer than most can imagine, and I bet it stomps on quite a few shorts before it collapses. As every currency trader learns--usually the hard way--a rising currency does not signal economic strength or stability.

Expect more idiocy from the likes of Zafer Onat, the chief executive of FinansInvest, a Turkish broker owned by National Bank of Greece (NYSE: NBG), who said on October 25, "I believe that the European monetary union doesn’t exist anymore. I think it already collapsed but no one has said it yet. Now we are in a deadlock. One of the world’s major reserve currencies will disappear."

Mr. Onat and many others, especially those in the investment world, often pretend to know what is going on and make statements or predictions formed with inadequate knowledge.

And for those of you who enjoy purchasing power parity, a Big Mac at the McDonald's (NYSE: MCD) restaurant on Kaiser Stra├če in Frankfurt costs €3.49.

And one other thing, don't forget to read Chapter One of More All The Patriot Terrorist.